Timothy R. Moore, Member, Spilman Thomas & Battle interviews Robert T. Braswell, President and Chief Executive Officer, Carolina Bank
Q: What is the most personally rewarding part of being a community banker?
A: Being a banker for 40 years, working for both larger regional and national banks as well as Carolina Bank for the last 18+ years, I find the community bank gives an individual more recognition for the value of their contribution. It allows you to impact more directly the lives of your staff and also allows you to have a deeper relationship with your clients as opposed to being more transaction-focused, which seems to be the mode of operation of many of the larger banks in our market.
Q: What do you think the typical community bank will look like in 10 years? Is it a dinosaur in its present form?
A: I don’t think the community banks in 10 or 20 years will be appreciably different from what they are today. Our ability to gain access to technology begins to level the playing field in the service delivery front. Community banks have all forms of electronic banking, including handheld smartphone digital banking. The real question is going to be how banks can manage through the labyrinth of governmental regulations and earn a sufficient return for their investors.
Q: As a whole, what do you think community banks are doing right? Where are they falling short?
A: Community banks as a whole, I believe, universally embrace the concept of relationship banking. That allows us to have a deeper relationship with our clients, understand their wants and needs, and consult with them on a level to hopefully make them more successful. By their success growing, indirectly we should benefit from that success as well. I think the community banks were slow to pick up that clients wanted to have more electronic banking options made available to them like those being forced upon clients of the larger banks. Whether that is good or not is dependent upon the individual person. We have, in retrospect, been slower than we should have been; however, I feel we have now caught up.
Q: What is your leadership philosophy? How has your philosophy molded Carolina Bank and its corporate culture?
A: My leadership philosophy has been molded by witnessing leadership at several of the institutions with whom I have worked and trying to emulate the more positive aspects of it and avoid the negative aspects. In that light, we are trying to empower the employee to do the right thing without the fear of retribution, without always having to get a supervisor’s approval to do something. Therein lies the basic fundamental idea of trust. Over time, we have also embraced a corporate-wide customer service expectation monitored both internally and externally. We have attempted to make it fun, however, by recognizing the achievers and counseling with the underachievers to make them as successful as possible. The fundamental goal at Carolina Bank is to take care of the client’s need in the most expeditious, professional, and proper way possible.
Q: Federal Reserve Governor Tarullo recently said bank directors should be made responsible for regulatory goals. His reasoning is that it would make the financial system safer because the directors would have to take a more long-term view of their risk-taking. This new duty would also mean they could be held accountable for any breaches in court. What are your thoughts on his proposal?
A: I disagree with Governor Tarullo in that directors are already responsible in their fiduciary role for the oversight of all banking operations. Although they are not to have management responsibilities, they are to expect that management does carry out the policies and procedures they approve, which includes all of the regulatory oversight. I’m afraid Governor Tarullo is only trying to further attack the directorate in making them more personally liable than they already are. If that financial institution were to fail, they can go more toward the individual director for any liability that they are able to prove instead of relying solely on the D&O Policy, which they seemingly have been doing the last three+ years.
Q: What are the best opportunities for growth of community banks?
A: The growth opportunities for community banks remain very fluid. It will, in part, be dependent upon the markets in which a particular bank is located and the economy of those specific markets. However, I feel growth opportunities will continue to be available as long as one sticks to the fundamentals of providing solid customer service, timely responses, and engagement with their clients. With the advent of technology now being available for most community banks that the larger banks have dominated for so long, there are very few barriers remaining. One exception is possibly international banking, and in some cases, insurance, which may or may not be a market in which any community bank feels they can excel. Our larger banking competitors continue to reduce the number of professional bankers on staff, adopting a more centralized approach to reduce costs. Lesser levels of staff mean less service. As our larger banks and some community banks adopt this strategy, the more traditionally forward banks have an opportunity by delivering service to acquire meaningful new relationships.
Q: You are very involved in the North Carolina Bankers Association and the American Bankers Association. You know and have talked with bankers across the country and state. What is the biggest external headwind facing community banks—government regulations, large credit unions, anemic economic growth, fewer people becoming bankers…?
A: Not surprisingly, our community banking peers across the United States all seemingly face much of the same issues we do here in North Carolina. The headwinds are caused by unrelenting government regulations, which are being written by individuals not familiar with the technical aspects of our industry as it exists today. The larger credit unions ($500,000,000 and above)—with North Carolina having three or more of those which operate more like a bank than a credit union while not paying taxes, giving them an unfair advantage—are the biggest threats. Lastly, there is a concern over the lack of talent available to enter our industry. The career paths in banking are not nearly as clear-cut today as they were 40 years ago, which makes it more difficult to sell some young people on the value and benefit of a career in banking. However, the pay scales are far more competitive today than what they were 40 years ago on a comparable basis. We, as an industry, have to train more of our staff internally, rather than relying on acquiring staff from larger banks, which are curtailing their hiring or spreading the few hires they have across multiple states.
Q: Carolina Bank recently opened its first branch in Winston-Salem, North Carolina. What have you learned is important for a bank to do as it grows its footprint in new markets? How does a bank differentiate itself from the other banks?
A: Each market a bank enters is going to be different. That bank needs to understand that and be flexible enough to respond to the needs of each individual community. What works in one market may or may not be received well in another. So, by having skilled, trustworthy staff who can help educate bankers at the central office, it helps make that new entrant gain traction far faster. The key issue, whether you are expanding in a market or entering into a new market, is the differentiation of service. Trying to describe customer service is like trying to describe the air we breathe. It is a highly intangible and personal reaction to service. We still define service as that interchange between two people or more, not interacting with someone in a foreign country on an 800 number. The consistency of delivering that service and the degree of professionalism as exhibited by the staff will help differentiate one bank from another. At the end of the day, it is people dealing with people.
Q: We’ve travelled together to Washington, D.C. on a couple of occasions for the NCBA Washington Bank Caucus. You are one to speak your mind on these trips. Do you believe that the people in Washington (regulators, administration and Congress) are listening and understand? Do you see anything changing?
A: I am concerned we all too often are speaking to deaf ears when we go to Washington. In many instances, the regulators’ hands are tied by regulations imposed on them by Congress. Unfortunately, members of Congress, regardless of the house or political affiliation, are bombarded daily by people lobbying for any number of special interests and needs. The men and women of Congress are tasked with an unbelievable challenge to try to understand and respond to each of those individual needs. In fact, aside from an ultimate vote that may be held on the floor, they may not have any ability to control or have influence because they don’t sit on that particular committee. Therefore, one has to learn whom to call on and how to call on them to be effective. That notwithstanding, there is clearly a disconnect between all of the various groups in that they do not talk with each other with fair, open communication, as each is trying to protect his or her own individual turf. The only way one will ever succeed is to constantly talk to our legislators at whatever level, and by constant contact, hopefully educate them on the issue that you are concerned with at the time, in hopes of gaining their support. The two most respected things in Washington are money and votes. If you cannot deliver either, your message will clearly fall on deaf ears. But, if you do not try, you have failed before you started